What you will study
Many people may be interested in evaluating the financial performance of an organisation. The most obvious people are the owners and people who work in an organisation, and in particular its managers. Evaluating financial performance is a way of understanding how effectively and efficiently the organisation is working. Other interested groups may include suppliers, financiers, customers, employee representatives and professional financial analysts; they may wish to know how well an organisation is working, but perhaps for different reasons. Some may be interested in profits and returns, while others may be interested in efficiency, sustainability or results. All of these perspectives will be covered in this course.
Most businesses and public sector organisations have to publish audited financial statements every year. These financial statements include an income statement and a balance sheet and these two statements provide the raw material for many financial performance measures to be calculated. These measures are the subject of this course. The course will help you to analyse published financial information in a meaningful way.
The course comprises four units:
Unit 1: Measuring profitability
This unit covers the covers the various ways in which profit may be evaluated, their benefits and limitations.
Unit 2: Measuring efficiency
This unit looks at the way assets and resources are managed in an organisation.
Unit 3: Measuring financial sustainability
In this unit you will learn how a business ensures it will be able to continue to operate for the foreseeable future, by understanding its liquidity and exposure to risk through gearing.
Unit 4: Measuring financial results
This unit goes beyond whether the investors or owners in a business achieve a profit to look at other measures of overall return.
The course is focused mainly on private sector businesses, and the examples and exercises within it are about business. However, many of the ratios and other measures identified in this course can be calculated and evaluated in a meaningful way for government and public sector organisations. However, some of them, such as profit measures and investor returns, do not translate to the public sector.
You will learn
By studying this course you will be able to:
- calculate the main financial ratios that can be derived from published financial statements
- draw some conclusions about an organisation based on these common performance measures
- recognise the limitations of such performance measures
- apply your learning to any organisation you are interested in.
This course was designed to be independently studied with no tutor support. StudentHome is a dedicated website that provides general study support and there is a computing helpdesk.